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This story started a week ago when Money Box interviewed a listener whose loyalty to her bank had not paid off. The listener had stayed with the same bank, NatWest, for home insurance for almost 40 years but was shocked to discover her renewal premium was over three times more expensive than a new quote from NatWest for the same cover.
The response to Money Box's story was so great that they ran another example this week. This weeks' listener had obtained a fresh quote for Saga via a price comparison site which was less than half of the renewal premium quoted.
Speaking on Money Box, Roger Ramsden, Chief Executive would not comment on individual case but defended the company's policy saying:
"Insurance is a very competitive market and many companies compete for business and part of the competition for that business is of course, as is for so many other industries, offering discounts for new customers.”
"The success of Saga absolutely rests on the confidence that customers have in Saga and that is what we do day in day out to ensure that we offer great value for money, the right price for our insurances. We always look at our pricing as I say, prices for home insurance customers last year went down in one in five cases.”
When challenged whether they would change their policy to ensure there would not be similar cases brought up next year Mr Ramsdan wasn't able to give a firm assurance saying:
"We operate in an intensely competitive environment in which we will see differences between prices at new business compared with prices received after that.”
James Daily, Money Editor for Which magazine said that the current pricing policies were a result of comparison sites. Insurers had to offer low prices to get any business but these prices were unsustainable and insurers would then rely upon customer inertia the following year to increase prices and profit margins.
Which followed around 250 of their members through the renewal process last year and found that on average insurers tended to push through increases of around 11% but there were exceptions where the increase was substantially higher.
"Cases like this one are quite extreme and I think there is a case to be made here that this is beyond just a few small price increases amounting to rather a large premium. This is now well beyond the point where this could be deemed a fair price for a home insurance policy, but unfortunately, going forward, this is going to be a danger that everybody is going to have to be watching out for .”
And the moral of the story? When your home insurance comes up don't renew, it's time to review.
Click here for the MoneyMaxim home insurance comparison service or call us free for a quote on 0800 520 0699.